Monday Coffee and Charts: AUD/USD and GBP/USD

October 24, 2016

Grab yourself a Monday morning coffee and open up your Vantage FX MT4 charts. We’ve got a big week ahead!

AUD/USD Daily:
161024_audusd_daily
Click on chart to see a larger view.

The Aussie daily chart just continues to coil like a wound up spring and just when you think it’s going to break out, it coils back up that little bit tighter.

The tighter it coils like this, the more and more positions in either direction the market is sucking in, and when it pops one way or the other, you just know stops are going to be triggered and you’re going to get a huge squeeze.

To start the week, we see the Fed’s Dudley and Bullard speaking tomorrow and then the big Aussie CPI release on Wednesday which could be the catalyst for the pop.

Just keep in mind that the statement on the conduct of monetary policy by Australian Treasurer Scott Morrison and new RBA Governor Philip Lowe has shifted the bank’s emphasis on inflation to a more long term reading. This means that the RBA will no longer have their hand forced into a knee-jerk interest rate cut as soon as a single CPI number misses expectations.

A beat should see the bullish trend resume and expecting an upside break out should be a no-brainer trade, but if the number misses then things could get interesting.

I don’t think the market quite understands what the change in rhetoric from the government and RBA actually means and I think we could get some serious whipsawing where an initial downward lurch might be quickly retraced and then some. This is the scenario where the biggest opportunity lies.

GBP/USD 4 Hour:
161024_gbpusd_4hour
Click on chart to see a larger view.

Flicking through our watchlist and (after the caffeine has started to hit) this GBP/USD flag catches the eye.

We’ve been talking about the Cable chart being all about the technicals following the Brexit drop which has tainted our charts.

Price is so heavy with each slow, shallow pullback smashed down hard when the inevitable drops keep coming. Continuing to look to go with the trend here, the 4 hour chart has printed a nice flag which is seeing support tested as we speak.

The lows just look very vulnerable and if this flag does break, we could get another hard and fast lurch straight back down to them. Is anyone buying this thing?

Are you trading Aussie or Cable? Let us know by sharing a chart with @VantageFX on Twitter.

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On the Calendar Monday:
NZD Bank Holiday: New Zealand banks will be closed in observance of Labor Day.

CHF SNB Chairman Jordan Speaks

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